Winbond Electronics Corp (華邦電), the world’s No. 3 NOR flash memorychip supplier, yesterday said it is to start building a new fab in September to cope with promising demand for memory chips used in Internet of Things (IoT) applications, cars and big data collection and analysis.
The NT$355 billion (US$11.90 billion) investment plan was given the go-ahead in September last year at a time when demand still outpaced supply after the memorychip market staged a comeback one year earlier. That led to an uptick in chip prices, which raised profits for most memorychip makers.
The Hsinchu-based chipmaker has not invested in a new factory since 2004, deterred by chronic volatility in demand and bouts of oversupply over the past decade.
Winbond is upbeat about memorychip demand over the next decade on the back of a “mega uptrend” created by demand from IoT, cars, cloud computing and big data technologies, Winbond chairman Arthur Chiao (焦佑鈞) told the Chinese-language Apple Daily on the sidelines of the firm’s annual shareholders’ meeting.
Growing awareness about the importance of cybersecurity will be another growth engine for memory chips, as all devices are about to be connected and data protection will become essential, Chiao said, adding that to cater to such demand, Winbond has to expand its capacity.
Winbond is slated to install equipment for the new fab in 2020 before ramping up production, Chiao said, adding that the 12-inch facility would be built in Kaohsiung.
Commenting on near-term market dynamics, Chiao said that customer demand softened somewhat in the first half of the year as customers built up excessive inventories in reaction to severe supply constraints last year.
Demand should pick up in the second half after customers reduce inventory to a healthy level, he said, adding that seasonal demand should add to the recovery.
“The second half will be a better period than the first,” Chiao said. “We expect business will continue to grow this year to surpass last year’s results, as we are expanding capacity to meet growing demand.”
DRAM chips contributed 47 percent to its memorychip revenue last year, while flash memory accounted for the remaining 53 percent, Winbond said.
Memory chips made up 81 percent of the company’s total revenue of NT$47.59 billion last year.
Winbond shareholders yesterday approved the distribution of a cash dividend of NT$1 per common share.
That represented a payout ratio of 65 percent as the company nearly doubled its net profit to NT$5.55 billion, or NT$1.54 per share, last year.
Shareholders also gave the go-ahead for the issuance of new shares to replenish operational capital and to fund capital expenditures.
The chipmaker plans to issue 350 million common shares to existing shareholders in the form of global depositary receipts.
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